Rules-based Multilateral Trading System Research Articles

The impact of the war in Ukraine on economic development, consequences for world trade

The war in Ukraine created a humanitarian crisis of enormous proportions and also a serious blow to the world economy. From a macroeconomic point of view, rising food and energy prices will reduce real incomes. CNUCED's express assessment of the impact of the war on trade and development in Ukraine confirms that the outlook for the global economy is rapidly deteriorating due to rising food, fuel and fertilizer prices. This study examines the impact of the crisis in Ukraine on global trade and development, highlights the importance of supplies of food, energy and certain industrial resources from Russia and Ukraine, and examines how the war poses significant risks to food and energy security and exacerbates the difficulties associated with with the supply chain. This study also shows that if a war were to split the world economy into separate blocs, the loss of income would be significant, especially for developing countries. Furthermore, it underscores the importance of a rules-based multilateral trading system, if only because the World Trade Organization provides functions that can help mitigate the effects of the crisis. It is important for international trade to better understand, analyze and monitor the nature, magnitude and implications of war for trade and development. Only with a clear understanding of these impacts can we create reliable supply chains, limit further losses in trade and economic development, and prevent the deepening of inequality between developed and developing countries. The purpose of the study is to analyze the impact of the war in Ukraine on economic development and determine the consequences for world trade. The research used the methods of induction and deduction and comparative analysis. The study shows that among the main threats and risks that arise for the world economy are destabilization, rising inflation, unemployment, the emergence of a food crisis and famine in some countries of the world, and an increase in world prices for raw materials. The consequences of the war in Ukraine will be felt by most countries of the world, and their scale will depend on the course and duration of the war on the territory of Ukraine. The biggest loss and the biggest problem of the war is human loss, but there are also huge economic problems that are felt far beyond the borders of Ukraine.

Position of Joe Biden’s Administration on the World Trade Organization

The election of Democratic Party candidate Joe Biden as President of the United States did not change Washington’s negative attitude towards the activities of the World Trade Organization (WTO). The historically established consensus of the Republican and Democratic parties, expressed in the general similarity of the approach of the legislative and executive branches of the U.S. government to the WTO as a tool primarily for realizing U.S. national interests in the foreign economic sphere, hinders the achievement of generally acceptable agreements within the WTO in key areas of its activities. Like the previous administration of Donald Trump, Joe Biden’s administration has, in particular, been blocking the activities of the WTO’s Appellate Body for a number of years. Despite the Democratic President’s statements about the commitment of the United States to the principles of liberal trade, the White House, as before, proceeds from the desire to maintain the leading role of the United States in the WTO, even at the cost of curtailing certain areas of its work. The dominant desire is to transform the WTO into an international economic mechanism to strategically contain China and openly oppose Russia by politicizing the WTO and taking measures that pave the way for the complete dismantling of the rules-based multilateral trading system. The WTO is in fact in a state of permanent institutional crisis in a number of central areas of its activity. The only way to deal with the current crisis is to give economics precedence, not politics, and prevent violations of agreed multilateral trade rules by unilateral actions; otherwise the negative impact on world markets and the economies of many WTO members will continue.

Position of Joe Biden's Administration towards the World Trade Organization

The election of Democratic Party candidate J. Biden to the post of the President of the United States did not lead to noticeable progress in relation to changing the vector of the generally negative attitude of official Washington in assessing the activities of the World Trade Organization. The historically established consensus of the Republican and Democratic parties, expressed in the general similarity of the approach of both the legislative and executive branches of government in the United States to the WTO as an instrument primarily for the realization of the national interests of the United States in the foreign economic sphere, hinders the achievement of generally acceptable agreements within this Organization in key areas of its activities. Like the previous administration of D. Trump, the administration of J. Biden has been blocking, in particular, for a number of years the activities of the WTO Appellate Body. Despite the Democratic President's statements about the US commitment to the principles of liberal trade, the White House, as before, proceeds from the desire to maintain the leading role of the United States in the WTO, even at the cost of curtailing certain areas of its work. The dominant drive is to transform the WTO into an international economic mechanism to strategically contain China, openly oppose Russia by politicizing the Organization and taking steps that pave the way for the complete dismantling of the rules-based multilateral trading system. The WTO is actually in a state of permanent institutional crisis in a number of central areas of its activity. The only way to deal with the current crisis is the prerogative of economics, not politics, the need to prevent the violation of agreed multilateral trade rules by unilateral actions, which otherwise will continue to have a negative impact on world markets and the economies of many WTO members.

Funding a Global Public Good

The ACWL was established to enhance the credibility and acceptability of the rules-based multilateral trading system embodied in the WTO. Having affordable access to the services of the ACWL ensures that developing and least-developed countries can effectively participate in and take full advantage of their WTO Membership. The ACWL has become a global public good that serves the interests of all WTO Members. As the ACWL has outgrown its original financial plan, there is an urgent need to put its financing on a secure basis. All WTO developed country Members should recognize the important role of the ACWL and help in the burden sharing of financing it. ACWL, global public good, rules-based multilateral trading system, developing countries, burden sharing, financing

When the hegemon goes rogue: leadership amid the US assault on the liberal trading order

Abstract Under President Trump, the United States abdicated its traditional leadership role in the trading system, abandoning multilateralism for aggressive unilateralism and launching an active assault on the World Trade Organization (WTO). Most strikingly, the US blocked appointments to the Appellate Body, jeopardizing the WTO's dispute settlement mechanism. With the trade regime in crisis, a key question has been whether other states would have the will and capacity to lead system-preserving initiatives. While most attention has focused on whether China—widely seen as the chief hegemonic challenger to the US—would assume the mantle of leadership, there has been considerable scepticism about the European Union's capacity to exercise leadership amid the crisis. The EU has generally been seen as punching below its weight in terms of leadership at the WTO. In this article, however, I argue that it is the EU, rather than China, that has taken the lead in advancing concrete initiatives directed at defending and maintaining the multilateral trading system. The EU led the creation of an interim appeals arrangement to replace the defunct Appellate Body—in effect, creating an ‘Appellate Body minus the US’. Although the rules-based multilateral trading system remains under threat, it is the EU, not China, that is acting as a system-preserving power, leading efforts to defend the established order.

Is Trade in COVID-19 Products in ASEAN Economies a Building or Stumbling Block?

Stumbling blocks to regional integration continue to pose a serious threat to the World Trade Organization (WTO), particularly during the COVID-19 pandemic. This study aims to examine the effect of regional economic integration on trade in COVID-19 products for Association of Southeast Asian Nations (ASEAN) countries using quarterly data for 2010–2020. A panel data model is estimated using the Poisson pseudo-maximum likelihood approach to address zero trade values, cross-sectional dependence, and heterogeneity problems. The findings of a case study on bilateral trade in COVID-19 products reveal that the ASEAN regional trade agreement is a stumbling block to the WTO’s rules-based multilateral trading system. The results indicate that the home country’s productive capacity, the host country’s absorptive capacity, the countries’ similarity in size and per capita income, and the countries’ remoteness have positive and significant relationships with trade in COVID-19 products in ASEAN economies. This study provides several policy implications for Southeast Asian countries.

Submission to the Joint Standing Committee on Foreign Affairs, Defence and Trade of the Australian Parliament: Inquiry into the Implications of COVID-19 Pandemic for Australia's Foreign Affairs, Defence and Trade

This parliamentary submission outlines a number of strategic recommendations in the area of supply chain resilience, labour-market adjustment and environmental policy for teh Australian Government as it prepares for recovery from the economic downturn inflicted by the COVID-19 pandemic and reiterates the need for Australia to support constructive engagement in the region to resist protectionism and uphold a rules-based multilateral trading system.

Trade wars: What do they mean? Why are they happening now? What are the costs?

SUMMARY How should economists interpret current trade wars and the recent US trade actions that have initiated them? In this paper, we offer an interpretation of current US trade actions that are at once more charitable and less forgiving than that typically offered by economic commentators. More charitable, because we argue that it is possible to see a logic to these actions: the United States is initiating a change from ‘rules-based’ to ‘power-based’ tariff bargaining and is selecting countries with which it runs bilateral trade deficits as the most suitable targets of its bargaining tariffs. Less forgiving, because the main costs of these trade tactics cannot be avoided even if they happen to ‘work’ and deliver lower tariffs. Rather, we show that the main costs will arise from the use of the tactics themselves and from the damage done by those tactics to the rules-based multilateral trading system and the longer-term interests of the United States and the rest of the world. JEL codes: F02, F13

A paradigm shift in the making: Designing a new WTO transparency mechanism that fits the current era

The rules-based multilateral trading system has been suffering from transparency challenges for decades. The theory of data technology provides a new perspective to assess the transparency provisions on their design, historic rationale, and evolution in light of the multilateral efforts for improvement since the General Agreement on Tariffs and Trade (GATT 1947). The development of frontier digital and data technologies, including mobile devices and sensors, new cryptographic technologies, cloud computing, and artificial intelligence, have completely changed the landscape of data collection, storage, processing, and analysis. In light of the new business models of international trade, trade administration, and governance, opportunities for addressing transparency challenges in the multilateral trading system have arisen. While providing solutions to transparency problems of the past, data technology applications could trigger new transparency challenges in trade and governance. For instance, questions arise as to whether developing countries would be able to access or provide trade information with the same quantity, understandability, and timeliness as more developed countries. This is in addition to the emerging transparency expectations of the current era, with the pandemic as an immediate challenge and the rise of “real-time” economy in a broader context. For the multilateral trading system to stay relevant, innovations for a holistic global mechanism for supply chain transparency, the transformation of council and committee operations, a smart design for technical assistance to tackle the digital divide, automated and real-time dispute resolution options and further integration of inclusiveness and sustainability considerations into trade disciplines should be explored.

Comment on “The Future of East Asia’s Trade: A Call for Better Globalization”

Comment on “The Future of East Asia’s Trade: A Call for Better Globalization”

Ensuring Continued Support for the Rules-Based Multilateral Trading System: The Need for a Public–Private Approach

The stability and resilience of intergovernmental and supranational institutions is increasingly being tested. The constraints that the WTO Agreement places on executive organs in its Members are being questioned in academia and by politicians. Reform of institutional aspects of the WTO’s dispute settlement process is coupled to the re-appointment of Appellate Body Members. These are interesting times for the rules-based multilateral trading system, to say the least. This think piece raises more questions than it can possibly answer. Yet, a central element that runs as a common thread through this contribution is the question whether trade liberalization, free movement of capital, and the resulting facilitation and emergence of GVCs have resulted in an inability of WTO Members to address domestic problems such as unemployment among workers in the manufacturing industry. Technological innovations such as automation and digitalization have equally contributed to a shift in the labour market from the manufacturing sector to other sectors. This raises questions as to the most appropriate and effective way to address the negative aspects of globalization and to ensure that the support for the rules-based multilateral trading system is not eroded. This contribution addresses the current criticism of the negative side effects of globalization and examines proposals at the bilateral level that are aimed at “conditionalizing” the liberalisation of trade. Thereafter it advocates a “public-private” approach at the domestic level which involves all stakeholders, as it is essential that those “left-behind” by globalisation are actively engaged with.

WTO Rules and Practices for Transparency and Engagement with Civil Society Organizations

In a rapidly changing trade environment, marked by economic slowdown and impasse in the Doha Round, the success of the WTO in promoting and legitimizing the rules-based multilateral trading system rests, to a large extent, on maintaining effective relations with civil society, including non-governmental organisations. This paper provides an overview of the WTO's rules and practices for transparency and engagement with NGOs. First, it looks at both internal and external transparency. Second, it deals with how the WTO engages with civil society and illustrates how this has evolved over time. Third, it looks at how NGOs and civil society contribute to the dispute settlement process. In concluding, it explores whether there is scope for enhancing the WTO's current practices for engagement with NGOs, and if so how. It also offers some suggestions on how NGOs can render the WTO more accountable to the public. One area in which the WTO's practices for transparency and channels of engagement with civil society actors has evolved considerably is dispute settlement. Although only WTO members can bring a dispute to the WTO, the practice of opening hearings to the public, upon the parties' request, and inviting contributions from non-members, including NGOs, shows to what extent WTO transparency and engagement with civil society have improved in recent times. In particular, NGOs have assisted parties to a dispute prepare their briefs. This has included annexing studies to the parties's submissions, submitting amicus curiae briefs, and supporting the panel as experts under Article 13 of the WTO's Dispute Settlement Understanding (DSU). Forging links with civil society is a formidable task for any intergovernmental organization; at issue are the rights of governments to set WTO policy and the need to respect the voices of those without a vote. Although the WTO's rules for engagement with civil society based on Article V:2 of the Marrakesh Agreement and further elaborated in the 1996 Guidelines have not been updated, the actual practices for engagement have evolved considerably over time and it is likely that they will continue to be improved upon in the future.

European and American Regionalism: Effects on and Options for Asia

This paper addresses several questions of concern to economies excluded from the world′s two major trading blocs. First, is there evidence from the past that suggests that the direct and indirect effects of RIAs on trade and investment have been income-reducing for economies not included? Many would answer "yes," and some cite the increasing regionalization of world trade to support that view. Section 1 of the present paper suggests that this conclusion is probably unwarranted. It is true that the share of world trade that is intraregional has been increasing. However, it is also true that the proportion of GDP traded has been increasing sufficiently rapidly for there to be growth, not only in trade with other regions but also in the share of GDP traded extraregionally. Section 2 then considers whether enlarging NAFTA and EU membership is likely to contribute to or slow this past trend for increasing economic integration across regions as well as within regions. Not all the signs are positive, and the net effect may indeed be negative, but the paper argues that, on balance, the concerns of excluded economies relating to trade and investment diversion probably are exaggerated. Section 3 focuses on the broader systematic question that is more worrisome for nonincluded small open economies; namely, will the proliferation of RIAs erode the GATT rules-based multilateral trading system? It concludes that there is indeed cause for this systemic concern. The final section of the paper looks at Asian and other nonincluded economies might respond to the economic integration initiatives in North America, Europe and elsewhere. J. Japan Int. Econ., December 1994, 8(4), pp.454–477. Centre for Economic Policy Research, London and Department of Economics and Centre for International Economic Studies, University of Adelaide, Adelaide, South Australia 5005, Australia; Department of Economics, Monash University, Clayton, Victoria 3168, Australia.